Graduate Managerial Accounting. Exercises 4-2, 4-3, 4-4, and 4-6. (Highlighted in attachment)

l 200 L~s10 ~~~~-! 200 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- Chapter 5 Required: 1. 2. Assume that the company uses absorption costing. Compute the unit product cost for one gamelan. Assume that the company uses variable costing. Compute the unit product cost for one gamelan. EXERCISE 5-2 Variable Costing Income Statement; Explanation of Difference in Net Operating Income [LO 5-2] Refer to the data in Exercise 5-1 for Ida Sidha Karya Company. The absorption costing income statement prepared by the company's accountant for last year appears below: Sales ................................ , .. . Cost of goods sold ...................... . Gross margin ........................... . Selling and administrative expense ........ . $191,250 157,500 33,750 Net operating income .................... . Required: 1. 2. Determine how much of the ending inventory consists of fixed manufactming overhead cost defe1Ted in inventory to the next period. Prepare an income statement for the year. using variable costing. Explain the difference in net operating income between the two costing methods. EXERCISE 5-3 Reconciliation of Absorption and Variable Costing Net Operating Incomes [LO 5-3] Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external repo11s to shareholders, creditors, and the government. The company has provided the following data: Beginning (units} ...................... . Ending (units} ......................... . Variable costing net operating income ..... . 200 170 $1,080,400 170 180 $1,032,400 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. Required: 1. Determine each year's absorption costing net operating income. Present your answer in the 2. form of a reconciliation report. In Year 4, the company's variable costing net operating income was $984,400 and its absorption costing net operating income was $1,012,400. Did inventories increase or decrease during Year 4? How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4? EXERCISE 5-4 Basic Segmented Income Statement [LO 5-4] Royal Lawncare Company produces and sells two packaged products, Weedban and Greengrow. Revenue and cost information relating to the products follow: --------------------------------------- ----- Variable Costing and Segment Reporting: Tools for Management Common fixed expenses in the company total $33,000 annually. Last year the company produced and sold 15,000 units ofWeedban and 28,000 units of Greengrow. . Required: Prepare a contribution format income statement segmented by product lines. EXERCISE 5-5 Companywide and Segment Break-Even Analysis [LO 5-5] Piedmont Company segments its business into two regions-North and South. The. company prepared the contribution format segmented income statement shown below: Variable expenses ....................... . 360,000 280,000 Contribution margin ..................... . 240,000 120,000 Traceable fixed expenses ................ . 120,000 60,000 Segment margin ........................ . 120,000 $ 60,000 Common fixed expenses ................. . 50,000 Net operating income .................... . $ 70,000 Required: l. Compute the companywide break-even point in dollar sales. 2. 3. Compute the break-even point in dollar sales for the North region. Compute the break-even point in dollar sales for the South region. EXERCISE 5-6 Variable and Absorption Costing Unit Product Costs and Income Statements [LO 5-1, LO 5-2] Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials ............................. . Direct labor................................. . Variable manufacturing overhead ............. . Variable selling and administrative ................. . Fixed costs per year: Fixed manufacturing overhead .............. " ... . During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company's product is $50 per unit. Required: 1. 2. 201: Managerial Accounting for Managers, Fourth Edition Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. Assume that the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year. EXERCISE 5-7 Segmented Income Statement [LO 5-4] Shannon Company segments its income statement into its North and South Divisions. The company's overall sales, contribution margin ratio, and net operating income are $500,000, 46%, and $10,000, respectively. The North Division's contribution margin and contribution margin ratio are $150,000 and 50%, respectively. The South Division's segment margin is $30,000. The company h~s $90,000 of common fixed expenses that cannot be traced to either division. ------1----- l . 201